Project Procurement Management

What is Project Procurement Management

Project Procurement Management consists of processes that are necessary to purchase or acquire products, results or services required from outside the project team. The self organization can either be the buyer or the seller.

When it comes to procurement management, contract negotiation, management and change control procedures need to be implemented in order to follow a successful procurement plan. The contracts are legal documents that mutually bind both the seller and buyer where seller provide something valuable and buyer is bound to return and pay via monetary terms of other compensating methods. These agreements can be simple or complex depending on the magnitude of the need / requirement.

Subcontracting / Sharing to a 3rd party is also sometimes knows as a risk response strategy under project management. When subcontracting, it means that a part of the project is transferred to a 3rd party which reduces the risk level from the project management team, hence the responsibility of taking care of the risk is already handed over to a third party.

Under the Procurement Management process, there are 4 processes identified by PMBOK 5th edition. They are;

Plan Procurement Management

Procurement Management Plan is about documenting how a project should handle procurement related activities such as the approach of purchasing, identifying potential sellers, etc… Through this process, it reveals whether it’s necessary to purchase or not and if it’s necessary to purchase, how, where, when the purchase should take place, etc…

Conduct Procurements

Under this process, choosing a seller / contractor and awarding a contract occurs. At the time of conducting, both parties need to come to a common legal agreement and proceed with the procurement process. There are few techniques used to select a contractor such as bidder conference where a RFP (Request for Proposal) document is built and shared among a set of contractors, hence they can come up with their proposals for the buyer to select the best choice among them.

Control Procurements

Monitoring and tracking the performance of the contractor is done under this process. While the project progresses, the relationship between the buyer and the seller will need to be maintained. Also if there are any necessary changes that need to be integrated with the already agreed contract, both parties can come under one roof, discuss and do the necessary changes to the contract as well. Through this phase, performance of both parties will be tracked to see whether there are any deviations from the agreed contract.

Close Procurements

This is the final process of procurement management process. Under this phase, both parties will formally and legally close the procurement contract. Once it’s done, contracts will be documented for future reference if any issue or concern is raised.

Below table shows under which Project Management Process Group the above processes are performed.

Initiating Planning Executing Monitoring and
No ProcessĀ  Performed Plan Procurement Management Conduct Procurement Control Procurement Close Procurement


**Please note that each and every individual process mentioned above will be explained further separately.

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